Most people are aware of the fact that a power of attorney is a document that you can use to give someone else the power to act on your behalf in a legally binding manner. On the surface, it may seem as though a power of attorney would have no place in an estate plan, but this is really not the case.
A well-constructed estate plan will center around the events that will take place after your passing, and the facilitation of asset distributions will be at the core. This being stated, it is also important to consider the events that may occur toward the end of your life.
We help people brace themselves for the eventualities of aging so that they can be comprehensively prepared. This is why powers of attorney can and should be part of your estate plan.
Incapacity Among Elders
To fully understand the importance of this facet of an estate plan, you have to digest some aging statistics. There is a tool on the Social Security Administration website that you can use to find out a person’s life expectancy based on his or her age.
If you were to use this calculator to measure the life expectancy of a man who is turning 67 today, the number would be 85 years, and it would be 87 for a woman. When you wrap your head around the fact that you are likely to become an octogenarian if you live long enough to collect Social Security, you can see that incapacity is a very real possibility.
There are other causes of incapacity, but Alzheimer’s disease alone is enough to get your attention. It strikes about one third of people who are in this age group. People with Alzheimer’s induced dementia are going to become unable to make sound medical and financial decisions at some point in time.
What would happen if you were to become incapacitated late in your life without executing any documents in advance to prepare for these circumstances? The answer is that the state would be petitioned to appoint a guardian to act on your behalf, and you would become a ward.
This is disconcerting in a general sense, and there are tangible drawbacks to consider. One of them is the fact that people in your family may not agree with regard to the right choice of a guardian.
Secondly, the person who is ultimately empowered by the court may not be someone who you would have selected yourself. Lastly, it can potentially be a time-consuming process, and the need for a decision maker can be immediate.
Durable Powers of Attorney
You can take the matter into your own hands and prevent a guardianship if you include durable powers of attorney within your broader estate plan. It should be noted that the “durable” designation is quite relevant. A power of attorney that is not durable would no longer be in effect upon the incapacitation of the grantor, but a durable power of attorney would remain active.
There is a hybrid form of the device called a springing durable power of attorney. This type of power of attorney would only go into effect if the grantor was to suffer from incapacity at some point in time.
If you do become unable to handle your affairs, there will be medical decisions that must be made, along with financial decisions. To account for this, you can execute a durable power of attorney for property along with a durable power of attorney for health care.
You do not have to name the same agent to act as the attorney-in-fact in both documents, but you can if you choose to do so.
We Are Here to Help!
An estate planning attorney from our firm would be more than glad to help you put a custom crafted estate plan in place that ideally suits your needs. We can also be called upon to review and potentially update your existing plan if you have not looked at it in years.
To set the wheels in motion, you can reach our Vermont office at 802-879-7133, and you can alternately send us a message through the contact form on this website.